Tax on Wall Street Speculation Act

I 118TH CONGRESS 1ST SESSION H. R. 4119 To impose a tax on certain trading transactions to invest in our families and communities, improve our infrastructure and our environment, strengthen our financial security, expand opportunity and reduce market volatility. IN THE HOUSE OF REPRESENTATIVES JUNE 14, 2023 Ms. LEE of California (for herself, Ms. OCASIO-CORTEZ, Mrs. WATSON COLE- MAN, Ms. NORTON, Mr. POCAN, Ms. OMAR, Ms. LEE of Pennsylvania, Mr. MCGOVERN, Ms. CHU, Mr. TAKANO, Ms. SCHAKOWSKY, Mr. HUFFMAN, Ms. JAYAPAL, and Ms. PINGREE) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To impose a tax on certain trading transactions to invest in our families and communities, improve our infrastruc- ture and our environment, strengthen our financial secu- rity, expand opportunity and reduce market volatility. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Tax on Wall Street 4 Speculation Act’’. 5 VerDate Sep 11 2014 23:27 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4119.IH H4119 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 4119 IH SEC. 2. TRANSACTION TAX. 1 (a) IN GENERAL.—Chapter 36 of the Internal Rev- 2 enue Code of 1986 is amended by inserting after sub- 3 chapter B the following new subchapter: 4 ‘‘Subchapter C—Tax on Trading Transactions 5 ‘‘Sec. 4475. Tax on trading transactions. ‘‘SEC. 4475. TAX ON TRADING TRANSACTIONS. 6 ‘‘(a) IMPOSITION OF TAX.—There is hereby imposed 7 a tax on the transfer of ownership in each covered trans- 8 action with respect to any security. 9 ‘‘(b) RATE OF TAX.—The tax imposed under sub- 10 section (a) with respect to any covered transaction shall 11 be the applicable percentage of the specified base amount 12 with respect to such covered transaction. The applicable 13 percentage shall be— 14 ‘‘(1) 0.5 percent in the case of a security de- 15 scribed in subparagraph (A), (B), or (E) of sub- 16 section (e)(1), 17 ‘‘(2) 0.10 percent in the case of a security de- 18 scribed in subparagraph (C) of such subsection, and 19 ‘‘(3) 0.005 percent in the case of a security de- 20 scribed in subparagraph (D) of such subsection. 21 ‘‘(c) SPECIFIED BASE AMOUNT.—For purposes of 22 this section, the term ‘specified base amount’ means— 23 ‘‘(1) except as provided in paragraph (2)— 24 VerDate Sep 11 2014 23:27 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4119.IH H4119 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 4119 IH ‘‘(A) in the case of any security described 1 in subparagraph (A), (B), (C), or (E) of sub- 2 section (e)(1), the fair market value of the secu- 3 rity (determined as of the time of the covered 4 transaction), and 5 ‘‘(B) in the case of any security described 6 in subparagraph (D) of such subsection, the 7 fair market value of the underlying investment 8 with respect to such security (determined as of 9 the time of the covered transaction), and 10 ‘‘(2) in the case of any payment described in 11 subsection (h), the amount of such payment. 12 ‘‘(d) COVERED TRANSACTION.—For purposes of this 13 section, the term ‘covered transaction’ means— 14 ‘‘(1) except as provided in paragraph (2), any 15 purchase if— 16 ‘‘(A) such purchase occurs or is cleared on 17 a facility located in the United States, or 18 ‘‘(B) the purchaser or seller is a United 19 States person, and 20 ‘‘(2) any transaction with respect to a security 21 described in subparagraph (D) of subsection (e)(1), 22 if— 23 ‘‘(A) such security is traded or cleared on 24 a facility located in the United States, or 25 VerDate Sep 11 2014 23:27 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4119.IH H4119 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 4119 IH ‘‘(B) any party with rights under such se- 1 curity is a United States person. 2 ‘‘(e) SECURITY AND OTHER DEFINITIONS.—For pur- 3 poses of this section— 4 ‘‘(1) SECURITY.—The term ‘security’ means— 5 ‘‘(A) any share of stock in a corporation, 6 ‘‘(B) any partnership or beneficial owner- 7 ship interest in a partnership or trust, 8 ‘‘(C) any note, bond, debenture, or other 9 evidence of indebtedness, other than a State or 10 local bond the interest of which is excluded 11 from gross income under section 103(a), 12 ‘‘(D) any derivative, or 13 ‘‘(E) any digital asset (as defined in sec- 14 tion 6045(g)(3)(D)). 15 ‘‘(2) DERIVATIVE.—The term ‘derivative’ 16 means any contract (including any option, forward 17 contract, futures contract, short position, swap, or 18 similar contract) the value of which, or any payment 19 or other transfer with respect to which, is (directly 20 or indirectly) determined by reference to one or 21 more of the following: 22 ‘‘(A) Any share of stock in a corporation. 23 ‘‘(B) Any partnership or beneficial owner- 24 ship interest in a partnership or trust. 25 VerDate Sep 11 2014 23:27 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4119.IH H4119 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 4119 IH ‘‘(C) Any evidence of indebtedness. 1 ‘‘(D) Any real property. 2 ‘‘(E) Any commodity which is actively 3 traded (within the meaning of section 4 1092(c)(4)). 5 ‘‘(F) Any currency. 6 ‘‘(G) Any rate, price, amount, index, for- 7 mula, or algorithm. 8 ‘‘(H) Any other item as the Secretary may 9 prescribe. 10 Except as provided in regulations prescribed by the 11 Secretary to prevent the avoidance of the purposes 12 of this section, such term shall not include any item 13 described in subparagraphs (A) through (H). 14 ‘‘(3) UNDERLYING INVESTMENT.—The term 15 ‘underlying investment’ means, with respect to any 16 derivative, any item— 17 ‘‘(A) which is described in any of the sub- 18 paragraphs (A) through (H) of paragraph (2) 19 (or any item substantially the same as any such 20 item), and 21 ‘‘(B) by reference to which the value of the 22 derivative, or any payment or other transfer 23 with respect to the derivative, is determined ei- 24 ther directly or indirectly. 25 VerDate Sep 11 2014 23:27 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4119.IH H4119 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 4119 IH ‘‘(4) TREATMENT OF EXCHANGES.— 1 ‘‘(A) IN GENERAL.—An exchange shall be 2 treated as the sale of the property transferred 3 and a purchase of the property received by each 4 party to the exchange. 5 ‘‘(B) CERTAIN DEEMED EXCHANGES.—In 6 the case of a distribution treated as an ex- 7 change for stock under section 302 or 331, the 8 corporation making such distribution shall be 9 treated as having purchased such stock for pur- 10 poses of this section. 11 ‘‘(f) EXCEPTIONS.— 12 ‘‘(1) EXCEPTION FOR INITIAL ISSUES.—No tax 13 shall be imposed under subsection (a) on any cov- 14 ered transaction with respect to the initial issuance 15 of any security described in subparagraph (A), (B), 16 (C), or (E) of subsection (e)(1). 17 ‘‘(2) EXCEPTION FOR CERTAIN TRADED SHORT- 18 TERM INDEBTEDNESS.—A note, bond, debenture, or 19 other evidence of indebtedness which— 20 ‘‘(A) is traded on a trading facility located 21 in the United States, and 22 ‘‘(B) has a fixed maturity of not more 23 than 60 days, 24 VerDate Sep 11 2014 23:27 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4119.IH H4119 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 4119 IH shall not be treated as described in subsection 1 (e)(1)(C). 2 ‘‘(3) EXCEPTION FOR SECURITIES LENDING AR- 3 RANGEMENTS.—No tax shall be imposed under sub- 4 section (a) on any covered transaction with respect 5 to which gain or loss is not recognized by reason of 6 section 1058. 7 ‘‘(g) BY WHOM PAID.— 8 ‘‘(1) IN GENERAL.—The tax imposed by this 9 section shall be paid by— 10 ‘‘(A) in the case of a transaction which oc- 11 curs or is cleared on a facility located in the 12 United States, such facility, and 13 ‘‘(B) in the case of a purchase not de- 14 scribed in subparagraph (A) which is executed 15 by a broker (as defined in section 6045(c)(1)), 16 the broker. 17 ‘‘(2) SPECIAL RULES FOR DIRECT, ETC., 18 TRANSACTIONS.—In the case of any transaction to 19 which paragraph (1) does not apply, the tax imposed 20 by this section shall be paid by— 21 ‘‘(A) in the case of a transaction described 22 in subsection (d)(1)— 23 ‘‘(i) the purchaser if the purchaser is 24 a United States person, and 25 VerDate Sep 11 2014 23:27 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4119.IH H4119 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 4119 IH ‘‘(ii) the seller if the purchaser is not 1 a United States person, and 2 ‘‘(B) in the case of a transaction described 3 in subsection (d)(2)— 4 ‘‘(i) the payor if the payor is a United 5 States person, and 6 ‘‘(ii) the payee if the payor is not a 7 United States person. 8 ‘‘(h) CERTAIN PAYMENTS TREATED AS SEPARATE 9 TRANSACTIONS.—Except as otherwise provided by the 10 Secretary, any payment with respect to a security de- 11 scribed in subparagraph (D) of subsection (e)(1) shall be 12 treated as a separate transaction for purposes of this sec- 13 tion, including— 14 ‘‘(1) any net initial payment, net final or termi- 15 nating payment, or net periodical payment with re- 16 spect to a notional principal contract (or similar fi- 17 nancial instrument), 18 ‘‘(2) any payment with respect to any forward 19 contract (or similar financial instrument), and 20 ‘‘(3) any premium paid with respect to any op- 21 tion (or similar financial instrument). 22 ‘‘(i) ADMINISTRATION.—The Secretary shall carry 23 out this section in consultation with the Securities and Ex- 24 VerDate Sep 11 2014 23:27 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4119.IH H4119 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 4119 IH change Commission and the Commodity Futures Trading 1 Commission. 2 ‘‘(j) GUIDANCE; REGULATIONS.—The Secretary 3 shall— 4 ‘‘(1) provide guidance regarding such informa- 5 tion reporting concerning covered transactions as the 6 Secretary deems appropriate, including reporting by 7 the payor of the tax in cases where the payor is not 8 the purchaser, and 9 ‘‘(2) prescribe such regulations as are necessary 10 or appropriate to prevent avoidance of the purposes 11 of this section, including the use of non-United 12 States persons in such transactions. 13 ‘‘(k) WHISTLEBLOWERS.—See section 7623 for pro- 14 visions relating to whistleblowers.’’. 15 (b) PENALTY FOR FAILURE TO INCLUDE COVERED 16 TRANSACTION INFORMATION WITH RETURN.—Part I of 17 subchapter B of chapter 68 of the Internal Revenue Code 18 of 1986 is amended by inserting after section 6707A the 19 following new section: 20 ‘‘SEC. 6707B. PENALTY FOR FAILURE TO INCLUDE COV- 21 ERED TRANSACTION INFORMATION WITH RE- 22 TURN. 23 ‘‘(a) IMPOSITION OF PENALTY.—Any person who 24 fails to include on any return or statement any informa- 25 VerDate Sep 11 2014 23:27 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4119.IH H4119 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 4119 IH tion with respect to a covered transaction which is re- 1 quired pursuant to section 4475(j)(1) to be included with 2 such return or statement shall pay a penalty in the 3 amount determined under subsection (b). 4 ‘‘(b) AMOUNT OF PENALTY.—Except as otherwise 5 provided in this subsection, the amount of the penalty 6 under subsection (a) with respect to any covered trans- 7 action shall be determined by the Secretary. 8 ‘‘(c) COVERED TRANSACTION.—For purposes of this 9 section, the term ‘covered transaction’ has the meaning 10 given such term by section 4475(d). 11 ‘‘(d) AUTHORITY TO RESCIND PENALTY.— 12 ‘‘(1) IN GENERAL.—The Commissioner of In- 13 ternal Revenue may rescind all or any portion of any 14 penalty imposed by this section with respect to any 15 violation if rescinding the penalty would promote 16 compliance with the requirements of this title and 17 effective tax administration. 18 ‘‘(2) NO JUDICIAL APPEAL.—Notwithstanding 19 any other provision of law, any determination under 20 this subsection may not be reviewed in any judicial 21 proceeding. 22 ‘‘(3) RECORDS.—If a penalty is rescinded under 23 paragraph (1), the Commissioner shall place in the 24 file in the Office of the Commissioner the opinion of 25 VerDate Sep 11 2014 23:27 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4119.IH H4119 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 4119 IH the Commissioner with respect to the determination, 1 including— 2 ‘‘(A) a statement of the facts and cir- 3 cumstances relating to the violation, 4 ‘‘(B) the reasons for the rescission, and 5 ‘‘(C) the amount of the penalty rescinded. 6 ‘‘(e) COORDINATION WITH OTHER PENALTIES.—The 7 penalty imposed by this section shall be in addition to any 8 other penalty imposed by this title.’’. 9 (c) CLERICAL AMENDMENTS.— 10 (1) The table of sections for part I of sub- 11 chapter B of chapter 68 of such Code is amended 12 by inserting after item relating to section 6707A the 13 following new item: 14 ‘‘Sec. 6707B. Penalty for failure to include covered transaction information with return.’’. (2) The table of subchapters for chapter 36 of 15 the Internal Revenue Code of 1986 is amended by 16 inserting after the item relating to subchapter B the 17 following new item: 18 ‘‘SUBCHAPTER C. TAX ON TRADING TRANSACTIONS’’. (d) EFFECTIVE DATE.—The amendments made by 19 this section shall apply to transactions after December 31, 20 2023. 21 VerDate Sep 11 2014 23:27 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H4119.IH H4119 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 4119 IH SEC. 3. OFFSETTING CREDIT FOR FINANCIAL TRANS- 1 ACTION TAX. 2 (a) IN GENERAL.—Subpart A of part IV of sub- 3 chapter A of chapter 1 of the Internal Revenue Code of 4 1986 is amended by inserting after section 25E the fol- 5 lowing new section: 6 ‘‘SEC. 25F. FINANCIAL TRANSACTION TAX PAYMENTS. 7 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli- 8 gible individual, there shall be allowed as a credit against 9 the tax imposed by this chapter for the taxable year an 10 amount equal to the tax paid during the taxable year 11 under section 4475 with respect to any covered trans- 12 action in which the taxpayer is a beneficial owner of the 13 security transferred in such covered transaction. 14 ‘‘(b) SPECIAL RULE.—If the tax imposed under sec- 15 tion 4475(a) with respect to any covered transaction is 16 paid by any person other than 1 or more beneficial owners 17 of the security transferred in such covered transaction, the 18 determination for how such tax is allocated to such bene- 19 ficial owners shall be made in a reasonable manner [Text truncated for display. Full text available on Congress.gov.]